Brian Armstrong headshot

Brian Armstrong | Pod of Jake #115

Check out Pod of Jake’s Episode Page and Shownotes 

Takeaways

  • Brian Armstrong felt like a failure when he was 28: all of his friends were making good money and had careers, and he was a failed entrepreneur 
  • All of his “failures” contributed to his eventual successes when looking back with hindsight, but at the moment they only feel like failures 
  • A heuristic for entrepreneurs unsure what to do: work on something that is the most interesting and most awesome thing to you
  • Technology is one of the greatest levers to improve the world, which includes money as a technology
  • Bitcoin is a technology that can inject economic freedom into countries all over the world 
  • “Everything in business comes back to hiring great people.” – Brian Armstrong 
  • Coinbase has taken a philosophy from Amazon.com called “Disagree and Commit”: even if you disagree with a decision that has been made, you must still work really hard to make it a success 
  • Brian Armstrong borrowed the 70/20/10 resource allocation strategy from Google: spend 70% of resources on the core business, 20% on adjacent bets, and 10% on venture bets 
  • Trying to change the world with policy and government intervention is inefficient and tends to create unintended consequences; it is better to change the world with science and technology 
  • Asking the mainstream media to objectively cover the tech industry is like asking Pepsi for a fair review of Coca Cola 
  • “The business section of the New York Times is basically an anti-business section.” – Brian Armstrong  

Introduction

  • Brian Armstrong (@brian_armstrong) is the co-founder and CEO at Coinbase, a leading cryptocurrency company on a mission to bring economic freedom to individuals around the globe. He is also the co-founder of NewLimit, a biotech company trying to remedy age-related diseases and extend the human health span. 
  • In this conversation, Brian Armstrong and Jake discuss Brian’s origin story as a failed entrepreneur, his eventual success with Coinbase, economic freedom, building through crypto’s hype cycles, how to hire great people, the benefits and shortcomings of remote work, choosing to work with regulators, decision-making frameworks used at Coinbase, extending the human healthspan with NewLimit, the decline of mainstream media, and the rise of new media
  • Check out these Podcast Notes from Brian’s conversation with Lex Fridman 
  • Host – Jake (@0FJake)

The Origin Story of Brian Armstrong

  • Brian was shy and introverted as a child
  • He was fascinated by computers from an early age; there were computers in the home since Brian’s mom was a programmer for IBM 
  • Brian and his friends created mini businesses and early e-commerce style websites
  • He studied computer science and business at Rice, where he continued creating businesses, such as University Tutor to help connect college students to college student tutors 
  • Brian broke into consulting after graduation so he could learn more about how companies operate, but only lasted a few months 
  • Brian tried about five business ventures after leaving consulting and even moved to Buenos Aires to try and figure out what he wanted out of life 
    • He says that he felt like a failure when he was 28; all of his friends were making good money and had careers, and he wasn’t sure what he was going to put his energy towards 
  • He ultimately decided to move to Silicon Valley and join a startup because trying to build one on his own was not working
    • He joined Airbnb as an early employee
  • Brian Armstrong read the Bitcoin whitepaper in 2014 and never looked back; six years after reading it Coinbase was valued at over $1 billion 
  • All of his “failures” contributed to his eventual successes when looking back with hindsight, but at the moment they only feel like failures 

How Brian’s Early Career Prepared Him to Start Coinbase

  • Even though major setbacks are painful at the moment, people tend to be grateful for the setbacks with enough time passing because it makes them who they are 
  • “You should basically go do the most ambitious, exciting thing you can think of regardless of what age you are, or what time it is, or if it’s the right time. It’s never the right time; you just have to go do it.” – Brian Armstrong 
  • A heuristic for entrepreneurs: work on something that is the most interesting and most awesome thing to you
  • If the idea is awesome and interesting to you, you’ll find a way to monetize it
    • Brian uses the example of Justin Kan, whose company began as him live streaming his life with a camera on his head, which eventually turned into Twitch and sold it to Amazon.com for $970 million  
  • Your range will expand as you experience more success and more failure, which widens your scope of companies you can start 

Coinbase Aims to Increase Economic Freedom 

  • Economic freedom is a composite metric that broadly evaluates how well the financial infrastructure in a given country works 
  • The more economic freedom, the more “things that we want in society” start to emerge
    • Happiness, growing incomes of the poor, GDP, etc. 
  • When economic freedom enables free markets, people are able to benefit from their contributions to society, which results in better outcomes for society compared to intervening in the free markets 
  • Countries are numerically ranked by their economic freedom, and categorized as one of the following: Free, Mostly Free, Moderately Free, Mostly Unfree, and Repressed 
  • Back in 2014, Brian realized that Bitcoin could be a way to inject economic freedom into countries all over the world 
    • Before Bitcoin, a person wanting to create economic freedom in countries needing it would have had to go into each country and attempt to improve policies, regulations, and systems that are probably impossible to change
  • Technology is one of the greatest levers to improve the world, which includes money as a technology 
  • Bitcoin provides non-confiscatable property rights to any person in the world if they can remember 12 words in their head 
  • Bitcoin is a deflationary currency, while fiat currencies are inflationary and vulnerable to hyperinflation 
    • No person or government can manipulate the monetary policy of Bitcoin to change it in their favor, which is not the case for fiat currencies that are unilaterally controlled by their government 
  • Cryptocurrencies are global, while fiat currencies are siloed to specific countries 

Building Coinbase Through Crypto’s Hype Cycles 

  • The crypto industry is either sharply up or sharply down in a given year, which is unique to the crypto industry and comes with its own set of trade-offs when building a company 
  • There were times when Coinbase had 200,000 unread customer support tickets after growing 500% in a single year 
    • The company would race to staff up, and then the crypto market would cool off for a few years
  • Brian Armstrong notes how important it is to make sure fixed costs can turn into variable costs 
  • Hiring great people while growing fast is a major challenge
    • If you’re not a “hell yes”, you’re a no 
    • If you’re not sure, round down 
  • Brian would rather miss out on hiring a great candidate due to Coinbase’s process than hire the wrong person 
  • Being remote-first allows Coinbase to employ people from all over the world 

The RAPID Decision-Making Framework 

  • The consulting firm Bain created a decision-making framework called RAPID
  • RAPID clearly defines who is giving input for a decision, and who is the actual decider 
  • RAPID process: clearly delineate roles upfront, make everybody write down their input in the shared document, have everybody read the document so everyone’s input is known to the group, discuss the input as a group and make updates as needed, and have each person put an “agree” or “disagree” in the document, then have the decider decide 
  • The worst sin that can be made in the RAPID process is putting a fake agreement in the document when you actually disagree 
  • Coinbase has taken a philosophy from Amazon.com called “disagree and commit: even if you disagree with a decision that has been made, you must still work really hard to make it a success 

Remote-First Working Culture 

  • Remote-first: you can go into an office if you want, but no one is required to 
  • Remote work allows companies to hire better people
  • Remote work 100X’s at the top of the hiring funnel 
  • Less than 1% of the global population lives 30-45 minutes from a Coinbase office, so opening up the funnel to anyone in the world quite literally 100X’s Coinbase’s reach  
  • “Everything in business comes back to hiring great people.” – Brian Armstrong 
  • The downsides of remote work: it’s harder to create camaraderie, there are fewer ad-hoc conversations that lead to improvements, and less spontaneity 
  • Coinbase tries to get its respective teams together in person once a quarter 
  • Brian Armstrong is bullish on VR, especially VR in the workplace 
  • VR can help recreate the spontaneity of in-person work 
  • Jake can see companies issuing VR headsets to new employees the same way they would issue computers to them 

Coinbase’s 70/20/10 Strategy for Resource Allocation 

  • Coinbase is designed to bolster “repeatable innovation”
  • Having a portfolio of various projects allows for new innovations to emerge that are not necessarily related to the core business model 
    • This is not only good for business, but it allows for people within an established organization to create new things and experience massive upside from their creations
  • Brian Armstrong borrowed the 70/20/10 resource allocation strategy from Google 
    • Put 70% of resources toward the core business 
    • Put 20% of resources toward strategic or adjacent bets 
    • Put 10% of resources toward venture bets 
  • The 70/20/10 strategy is not a magic solution or *the* framework for an organization; it is a reasonable simplifier for a large organization with competing priorities 
  • It helps balance the attention of the company between what makes it money without missing out on the innovation-of-tomorrow 

Coinbase’s Contrarian Decision to Work With Regulators 

  • Coinbase has worked with regulators from day one 
  • For crypto and Coinbase to become mainstream, the company could not “fly under the radar”
  • In the absence of regulatory clarity, Coinbase defaults to doing what is reasonable 
  • Your business will probably fail if you sit around and wait for regulatory clarity 
  • Coinbase has embraced decentralization over time 
  • Not your keys, not your coins: a meme that underscores the importance of self-custody 

Extending the Human Healthspan with NewLimit

  • Brian is an investor and board member of NewLimit, a biotechnology company that is developing epigenetic reprogramming medicines to treat diseases with large unmet needs 
  • Brian thinks it’s cool that successful software entrepreneurs are starting new businesses in the hard tech industry 
  • Brian wants to find ways to improve the world with science and technology 
  • Trying to change the world with policy and government intervention is inefficient and tends to create unintended consequences
  • He had to consider what he wanted to do with his newfound fortune following Coinbase’s public offering 
  • The field of longevity kept coming up when Brian would talk to scientists and technologists about emerging industries 
  • Brian noticed differences in his physiology from age 29 to 39 and began questioning his own mortality 
  • Most diseases are diseases of aging: diabetes, cancer, heart disease, cognitive decline, etc. 
  • NewLimit is trying to solve the meta-problem of age-related disease instead of focusing on solving individual diseases

New Media Is Replacing Mainstream Media

  • The shift to media is new but has been happening for a while now 
    • Example: Craigslist
  •  The explicitly clear anti-tech bias from mainstream media is because their advertising business has been disrupted by the tech companies they cover 
  • Asking the mainstream media to objectively cover the tech industry is like asking Pepsi for a fair review of Coca Cola 
  • The mainstream media is still viewed as a source of truth in some parts of the U.S. and for certain age groups 
    • Example: people over the age of 40 on the East Coast 
  • Brian Armstrong reaches the company’s younger audience by doing new media, but still devotes 20% of his media time budget to the mainstream media channels so he doesn’t completely disregard an important percentage of people
  • Interacting with the mainstream media is like interacting with the mafia: you pay the mafia to protect yourself from the mafia 
  • Brian says the mainstream media reaches out to Coinbase on a weekly basis and basically gives them 48 hours to respond to a negative piece about X as it relates to the company 
    • More often than not, the information the journalists publish is entirely false or predominantly false
  • The most common job of most communication teams at tech companies is to get on the phone with journalists and convince them to not publish the false information they’re about to publish 
  • Not all mainstream media is bad; Brian estimates that about 5-10% of the industry is still doing unbiased, good work  
  • “Every company should be building their own direct communication channels with their core audiences.” – Brian Armstrong 
  • Companies need to have direct communication channels with their audience to not only correct wrong information that is published by mainstream news but to also publish general, the good news about technology 
  • “The business section of the New York Times is basically an anti-business section.” – Brian Armstrong  
    • It’s filled with stories about companies that the NYT doesn’t like or thinks are doing bad things, sometimes completely unrelated to the business at all 

ResearchHub  

  • There’s a massive divide between the scientific community and the startup world 
  • ResearchHub is a platform to connect the scientific community and the startup community 
  • Many scientists are business-illiterate, and many businesspeople are science-illiterate 
  • Research papers are tough to read for much of the population 
  • ResearchHub is an effort to write and share scientific papers in plain English 
  • Licensing technology from traditional research papers is painstakingly bureaucratic, contrasted with software that is oftentimes freely available on Github  
    • The former stifles innovation, and the latter bolsters it 

Books Mentioned

Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail by Ray Dalio

Pod of Jake : , , , , , , , , , ,
Notes By Stan Rizzo

More Notes on these topics

Top Insights and Tactics From

31 Best Podcasts of All Time

FREE when you join over 35,000 subscribers to the
Podcast Notes newsletter

No Thanks